In the January 2018 edition of ‘Beste Belegger’, you were introduced to an interesting contribution named ‘De VFB Eindejaarsvraagjes’ (or VFB end-of-year questions). A number of analysts each introduces three shares worth buying.
A brave task with the final score in December 2018; brave in particular considering that the economic and political landscape can change tremendously within 12 months.
Thought has been put into the shares worth buying, and exactly for that reason, lists like these have great value. Perhaps more on the fundamental than the technical side. Moreover, it concerns a plethora of different applied valuation models and growth prognoses, which makes the report even more intriguing.
These examinations will save you a lot of time, and you will be able to limit yourself to a relatively small group of shares worth buying. The wheat and the chaff have been separated.
The analysts expect a bright future for the shares discussed. It is up to you, as an investor, to determine when you step in. Do you have the means to buy freely? Would you prefer waiting for a small dip? And, indeed, not all recommended shares will actually perform the way that is expected in 2018… Perhaps a share performs poorly in 2018, but it might start going up in 2019.
The choice of shares is in your hands, which brings us to the next step: how do you determine the moment of purchase?
You can examine the shares separately on a technical lattice, or you can analyse them collectively. In this contribution, I will focus on the collective method, because that saves you a lot of time. In addition, it is a simple and logical method – no complicated formulas.
The first column of the table above shows the recommended European shares.
The columns next to it indicate the yields and strengths on the basis of stock data of 24 January 2018. What do these columns mean, and how do you interpret their value? The following terms will be explained in English.
%HH-3mnd: measures the difference between the closing price and the highest price of the past 3 months
%HH-1jr: measures the difference between the closing price and the highest price of the past year
Interpretation: The smaller the value, the closer the share quotes to its top.
%LL-3mnd: measures the difference between the closing price and the lowest price of the past 3 months
%LL-1jr: measures the difference between the closing price and the lowest price of the past year
Interpretation: The smaller the value, the closer the share quotes to its bottom.
IDX: Represents the stock market index; in this example, EuroStoxx600 is used
IDX-Sterkte-KT: measures the relative strength of the share relative to the stock market index on the short term
IDX-Sterkte-MT: measures the RS of the share relative to the stock market index on medium term
Interpretation: If it lies around 100, the share moves as much as the stock market index.
KRS-Sterkte KT: measures the strength of market movement on the short term
KRS-Sterkte MT: measures the strength of market movement on the medium term
Interpretation: the market strength is neutral around 50.
From the technical analysis in this article, we will take away some elements that will help us become successful investing in shares: